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Common Law: Increase In Value Of Property During Common-Law Period

Common Law: Increase in Value of Property During Common-Law Period

In Alberta, common law couples are legally referred to as adult interdependent partners. As well, there is no legislation that governs the division of common law property. The Matrimonial Property Act only encompasses parties who are married. This said, parties in a common law relationship may claim interest in property in the event of a relationship breakdown.

Our family law lawyers explain the logistics below on dealing with a value increase of property for common law partners in Calgary.

Unjust Enrichment Claim

Because the Matrimonial Property Act does not apply to common law couples, common law couples must argue some sort of unjust enrichment claim. To prove unjust enrichment, the applicant must show:

  • A benefit or enrichment on the respondent
  • The claimant suffers a corresponding loss or financial disadvantage
  • There is no juristic or legal reason to justify the financial gain

To determine whether or not there is a juristic reason, the Court will do a 2-stage analysis.

  • First, the onus is on the Plaintiff to show that no juristic reason is recognized. If the Plaintiff meets this onus, then the onus shifts to the
  • Defendant to show that there is a just reason arising from all the circumstances of the transaction and why he/she should retain the benefit.

In the second stage, the Court considers the reasonable expectations of the parties and public policy considerations.

Monetary Damages

Where a Court finds that an unjust enrichment claim was made out, the Court will award monetary damages. If the Claimant proves that monetary damages are inappropriate or not sufficient, then the Court may award proprietary damages by way of a constructive trust or a resulting trust.

A monetary award may be calculated based upon the value received, by way of a payment of fee-for-services rendered (quantum meruit) or if the Court finds that the property was a joint family venture (after considering mutual effort, economic integration, actual intent, and priority of family), then the Court will grant a remedy awarding a share of the assets based upon the proportionate contribution by the claimant.

Constructive Trust

Where the Court finds that there has been an unjust enrichment, the Court will generally award monetary damages. If the Court finds that it is not appropriate or sufficient, then proprietary damages may be reasonable. Proprietary damages are typically by way of a constructive trust.

To prove a trust is appropriate, the claimant must demonstrate a sufficiently substantial and direct link, a causal connection or a nexus, between the claimant’s contributions and the property’s acquisition, preservation, maintenance, or improvement of the property subject of trust.

Resulting Trust

This is not used as often, but remains law in Canada. A resulting trust is a trust of a legal estate, whether in the names of the purchaser or others that “results” to the person who advances the purchase money. The “common intention resulting trust” is no longer good law.

Frequently Asked Questions

Who gets the increase in value in our home after a common law separation?

If both common law spouses are on the title, the increase in home value is likely to be shared equally. If one spouse wants to keep the house, they will need to buy out the other spouse for half of the fair market value of the house, subject to any adjustments for exemptions. If only one common law spouse is on the title, the increase in value is likely still shareable in some fashion as family property, subject to any adjustments for exemptions.

How are assets divided in a common law relationship?

Common law couples that have separated after January 1, 2020 will move forward with an equal division of Family Property, subject to exemptions. Common law couples that separated prior to January 1, 2020 will need to explore whether or not a trust claim should be made for a property that was accumulated during the relationship.

Is a common law wife entitled to half?

If your separation occurred prior to the new Family Property Act coming into effect on January 1, 2020 a common-law partner will likely need to pursue a trust claim to seek a division of property. However, if your separation occurred after January 1, 2020 the new Family Property Act will apply to your separation, and there will be a presumption of equal sharing of property, subject to any exemptions.

If you are going through a common law separation and need legal advice, connect with us to set up an initial consultation today.